YOUR BUSINESS LINK INTO AFRICAAFRICA DESK

CONTENTS PAGE

Africa Desk 2 Africa Desk 3

ABOUT BDO..........................................................................................................................................................04DELIVERING EXCEPTIONAL TAX SERVICE INTO AFRICA........................................................................04ISSUES THAT CAN IMPACT YOUR BUSINESS WHEN INVESTING IN AFRICA...................................04ISSUES THAT IMPACT THE FUNDING STRUCTURE..................................................................................04FOR COMPANIES SEEKING TO INVEST OR DO BUSINESS IN AFRICA...............................................04OUR THREE PHASE APPROACH....................................................................................................................06THE BDO TEAM CAN ASSIST YOU WITH YOUR ENTRY INTO AFRICA ..............................................06

OUR AFRICAN FOOTPRINT.............................................................................................................................07

MULTIDISCIPLINARY OPERATIONAL MODEL..........................................................................................08

OUR GLOBAL PRESENCE...................................................................................................................................09AMERICAS.............................................................................................................................................................09EMEA .....................................................................................................................................................................09ASIA PACIFIC .......................................................................................................................................................09

FOR COMPANIES SEEKING TO INVEST OR DO BUSINESS IN AFRICA

There are numerous cultural, legal, financial, infrastructural and risk management challenges to consider. BDO can help with all of these.

Our business advisers bring country- specific, tailored advice to businesses facing the challenge of efficiently administering multiple operations within and across varying business jurisdictions. Expanding across borders is a complex exercise – unfamiliar cultures, new business landscapes, complicated tax structures and differing regulatory regimes can present daunting hurdles. It is vital to partner with an experienced team who can guide you every step of the way.

We become the face for your company in the country in which you are starting a new business. We advise on the most efficient way of establishing a business, including examination of accounting, tax, legal, statutory and exchange control requirements in each country. This is all coordinated from one office in South Africa.

Why not profit from our experience when venturing into Africa?

ABOUT BDO

BDO IN SOUTH AFRICA PROVIDES AUDIT, ADVISORY AND TAX SERVICES TO A BROAD RANGE OF CLIENTS - FROM LARGE JSE-LISTED COMPANIES TO SMALL AND MEDIUM SIZED ENTITIES, INDIVIDUALS AND THE PUBLIC SECTOR. AS THE SOUTH AFRICAN MEMBER FIRM OF BDO INTERNATIONAL, WHICH HAS OFFICES IN 167 COUNTRIES, WE HAVE BEEN DELIVERING EXCEPTIONAL SERVICE TO OUR CLIENTS SINCE 1963.

IN SOUTH AFRICA WE SERVE CLIENTS FROM OFFICES IN CAPE TOWN, DURBAN, JOHANNESBURG, NELSPRUIT, PORT ELIZABETH, PRETORIA AND STELLENBOSCH.

BECAUSE OF OUR SKILLS AND EXPERIENCE, WE ARE TRUSTED TO DELIVER A QUALITY OF SERVICE THAT IS UNDERPINNED BY A TAILORED APPROACH TO EVERY CLIENT. OUR PEOPLE HAVE THE SKILLS AND EXPERIENCE TO TAKE RESPONSIBILITY FOR THE WORK THEY DO AND ARE AGILE AND QUICK IN RESPONDING TO CLIENT DEMANDS. OUR APPROACH INVOLVES LISTENING TO OUR CLIENTS, UNDERSTANDING THEIR EXPECTATIONS AND DELIVERING THE CALIBRE OF SERVICE ASSOCIATED WITH A LEADING GLOBAL FINANCIAL SERVICES FIRM.

Africa Desk 4

DELIVERING EXCEPTIONAL TAX SERVICE INTO AFRICA

For organisations looking to capture business opportunities provided by other African countries, our team can help you minimise risk and maximise potential.Through our extensive network in almost every African country, we can identify the latest developments as they would pertain to your business venture.

ISSUES THAT CAN IMPACT YOUR BUSINESS WHEN INVESTING IN AFRICA

Companies that expand into Africa, must consider financing options when they are set up to optimise after tax returns on investment.

Several tax and regulatory issues need to be considered early on in this process. For example, it needs to be established whether the South African company has an offshore parent.

If so, then it is unlikely that South Africa will be used as an intermediate holding company jurisdiction as the parent company may be subject to Controlled Foreign Company legislation (CFC), similar to South Africa. Most multinationals avoid multiple-layeredCFC regimes and invest directly from the holding structure.

Many funding decisions require consideration of the tax consequences.

“A number of tax and regulatory issues need to be considered early on in the process. For example, it needs to be established whether the South African company has an offshore parent.”

ISSUES THAT IMPACT THE FUNDING STRUCTURE

Issue Structuring considerations Factors to consider

Debt/equity ratio

Nominal share capital, i.e. thin capitalisation rule.

Optimal initial debt/equity mix

Functional currency for accounting and tax purposes

Currency in which revenue must be earned

Currency in which loan/equity currency is or must be denominated

If loan funding is required, must the loan be interest bearing?

Loans from parent or from a third party?

Consider whether any guarantees are required

Consider special tax regimes applicable in host country

Level of withholding taxes on interest, service fee and dividend remittances.

Interest rates in lending and borrowing countries

Currency accounting

Funding currency

Interest charging

Funding source

Guarantees

Special tax regimes

Remittance regulations

Debt levels

Central Bank

Earnings currency

Local capital regulations; Exchange control rules on remittance of debt versus equity

Local capital regulations; Exchange control rules on remittance of debt versus equity.

Local advice required

important as it will affect choice of funding currency to ensure loan currency is hedged

Earning currency, remittance issues, bank regulations, local currency exchangeability

Local withholding tax issues, local tax base projections, host country transfer pricing issues, parent guarantees

Consider options together with issues above

Host country transfer pricing rules, local country deductability for guarantee fees

e.g. special rules for mining operations and incentives for manufacturing in local country.

Local legislation, double tax treaty relief, regional tax agreements, stability agreements.

Transfer pricing rules and double tax treaties to be considered.

Africa Desk 5

REG

ULA

TIO

NS

BDO’S AFRICAN FOOTPRINT

Africa Desk 6

THE BDO TEAM CAN ASSIST YOU WITH YOUR ENTRY INTO AFRICA

• Establishing business operations• Educating you on African business cultural behaviors• Undertaking due diligence of company affairs in Africa• Performing taxation compliance, expatriate payroll and accounting services• Setting up back office functions (representative offices and expatriate policies)• Structuring and planning for international taxation• Reorganising corporate structure in Africa

Phase APre-implementation

Advising on forms of doing business & choice of entity,

Accounting & statutory requirements, Direct &

Indirect tax requirements & Exchange controls.

Phase BImplementationRegistrations &

applications of entity, business licence, Income

Tax, VAT & set-up of bank accounts.

Phase CPost-implementationCompliance, Business

controls, Transfer Pricing, Agreements, Expatriate policies, AMS tracking,

Payroll, Auditing & Accounting.

“Our business advisers bring country-specific, tailored advice to businesses facing the challenge of efficiently administering multiple operations within and across varying business jurisdictions.”

BDO MEMBER FIRMS

Algeria, Angola, Botswana, Burundi, Cape Verde Islands, Comoros, Egypt, Ethiopia, Ivory Coast, Kenya, La Reunion,Madagascar, Malawi, Mauritius, Morocco, Mozambique, Namibia, Niger, Nigeria, Rwanda, Seychelles, Sierra Leone, South Africa, Tanzania, Togo, Tunisia, Uganda, Western Sahara, Zambia, Zanzibar and Zimbabwe

INDEPENDANT REFERRAL FIRMS

Benin, Burkina Faso, Cameroon, CAR, Chad, Congo, Djibouti, DRC, Equatorial Guinea, Eritrea, Gabon, Gambia, Ghana, Guinea Bissau, Guinea, Lesotho, Liberia, Libya, Mali, Mauritania, Senegal, Soa Tome & Principe, Somalia, Southern Sudan, Sudan and Swaziland,

Africa Desk 7

OUR THREE PHASE APPROACH

BDO MEMBER FIRMS

INDEPENDENT REFERRAL FIRMS

SUB-SAHARAN AFRICA ADVISORY FIRM BEING PLANNED

Lesotho

South Africa

Algeria

Mauritania

Mali

Libya

Gabon

Tuni

sia

Moroc

co

Cape Verde Islands The Gambia

Guinea Bissau

Sierra Leone

Liberia

Equatorial Guinea

Guinea

Burkina Faso

Cam

eroonG

hana

Togo

Beni

n

Senegal

Western Sahara

Nigeria

Egypt

Zambia

Mad

agas

car

KenyaUganda

Malawi

Tanzania

Democratic Republic of the

Congo

Rwanda

Swaziland

BurundiRep.

of t

he C

ongo

Mozam

bique

Zimbabwe

Botswana

Djibouti

Central African

Republic (CAR)

EritreaChad Sudan

Southern Sudan

Ethiopia

Soma

lia

Angola

Namibia

Niger

CÔte d’Ivoire

Comoros, Mauritius, La Reunion, Seychelles, Zanzibar

Africa Desk 8

MULTIDISCIPLINARY OPERATIONAL MODEL

“BDO in South Africa provides audit, tax, and advisory services to a broad range of clients - large JSE-listed organisations, privately-owned companies, the public sector, individuals and small and medium sized entities.”

AMERICAS• Anguilla• Antigua & Barbuda• Argentina• Aruba• Bahamas• Barbados• Bolivia• Bonaire• Brazil• British Virgin Islands• Canada• Cayman Islands• Chile• Colombia• Costa Rica• Curacao• Dominica & Grenada• Dominican Republic• Eastern Caribbean• Ecuador• El Salvador• Guatemala• Honduras• Jamaica• Mexico• Montserrat• Nicaragua• Panama• Paraguay• Peru• Puerto Rico• St. Kitts & Nevis• St. Lucia• St. Maarten• St. Vincent & Grenadines• Suriname• Trinidad & Tobago• Turks & Caicos• United States of America• Uruguay• US Virgin Islands• Venezuela

OUR GLOBAL PRESENCEEMEA• Albania• Algeria• Andorra• Angola• Armenia• Austria• Azerbaijan• Bahrain• Belarus• Belgium• Botswana• Bulgaria• Burundi• Cape Verde• Comoros• Croatia• Cyprus• Czech Republic• Denmark & Faroe Islands• Egypt• Estonia• Ethiopia• Finland• France• Francophone West Africa• French Guiana• Georgia• Germany• Gibraltar• Greece• Greenland• Guernsey• Hungary• Iceland• Ireland• Isle of Man• Israel• Italy• Ivory Coast• Jersey• Jordan• Kazakhstan• Kenya• Kosovo• Kuwait• Latvia• Lebanon• Liechtenstein• Lithuania• Luxembourg

• Macedonia• Madagascar• Malawi• Malta• Mauritius• Moldova• Mongolia• Montenegro• Morocco• Mozambique• Namibia• Netherlands• Niger• Nigeria• Northern Ireland• Norway• Oman• Poland• Portugal• Qatar• Republic of Srpska (Bosnia and Herzegovina)• Reunion Island and Mayotte• Romania• Russia• Rwanda• San Marino• Saudi Arabia• Serbia• Seychelles• Sierra Leone• Slovak Republic• Slovenia• South Africa• Spain• Sweden• Switzerland• Tajikistan• Tanzania• Togo• Tunisia• Turkey• Turkmenistan• UAE• Uganda• Ukraine• United Kingdom• West Bank & Gaza• Zambia• Zimbabwe

ASIA PACIFIC• Afghanistan• Australia• Bangladesh• Brunei Darussalam• Cambodia• China• Fiji• French Polynesia• Hong Kong & Macao• India• Indonesia• Japan• Korea• Laos• Malaysia• Myanmar• Nepal• New Caledonia and Wallis & Futuna• New Zealand• Pakistan• Papua New Guinea• Philippines• Samoa• Singapore• Sri Lanka & Maldives• Taiwan• Thailand• Vietnam

Africa Desk 9

AUDIT

Financial Services and other regulated sectors such as retirement funds and medical schemes

JSE Listed Companies

Privately Held Companies

Public Sector

ADVISORY

B-BBEE Verification Services

Business Restructuring

Company Secretarial

Corporate Finance

Cyber, Innovation, Assurance and Analytics (CIAA)

Economic Advisory

Financial Management Services

Infrastructure Advisory

Internal Audit and Forensics

Legal Services

People and Business Solutions

Risk Advisory

Sustainability

Strategic And Development Advisory

Wealth Advisory

TAX

Corporate Tax Compliance

Corporate Tax Consulting

Global Employer Services

Individual, Trust and Estate Tax

International Tax

Transfer Pricing Services

VAT and Customs

BUSINESS SERVICES AND ADVISORY

BDODrive

Independent Reviews

Payroll Outsourcing

SME Tax

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FOR A CLEAR PERSPECTIVE,PLEASE CONTACT US:

BDO Tax Services (Pty) Ltd, a South African company, is an affiliated company of BDO South Africa Inc., a South African company, which in turn is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.

www.bdo.co.za

/bdoafrica/BDOSouthAfrica /bdo_sa /company/bdo-south-africa

AFRICA DESK LEADEROwen Murphy omurphy@bdo.co.za T 011 488 1700

NATIONAL HEAD OF AUDITHeemal Bhaga-Muljee hbhagamuljee@bdo.co.za T 011 488 1700

NATIONAL HEAD OF ADVISORYThuto Masasatmasasa@bdo.co.za T 011 488 1700

NATIONAL TAX OPERATIONSLindy Steynlsteyn@bdo.co.zaT 011 488 1700

https://www.youtube.com/user/BDOSouthAfricahttps://www.facebook.com/BDOAfrica/?fref=tshttps://twitter.com/BDO_SAhttps://www.linkedin.com/company/505072?trk=tyah&trkInfo=clickedVertical%3Acompany%2CclickedEntityId%3A505072%2Cidx%3A4-1-9%2CtarId%3A1474379177383%2Ctas%3Abdo%20south%20